The impacts of Covid-19 on Aotearoa/New Zealand's working people: A report 12 months on
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The impacts of Covid-19 on Aotearoa/New
Zealand’s working people: A report 12 months on
Dawn Duncan
New Zealand has been comparatively fortunate, with a total of 2,372 confirmed or probable cases of
Covid-19 infection and 26 deaths to date. 1 The economic impacts are, so far, less severe than
originally expected,2 with unemployment currently sitting at 4.9%.3 New Zealand has enjoyed a
summer of relative normality, with the absence of the virus in the community making large events
and domestic holiday travel possible. Health officials have just started vaccinating front-line border,
managed isolation and healthcare workers and a public vaccination campaign will likely commence
later in the year.4 However, the pandemic is far from over, and New Zealand is particularly exposed
to longer term international economic trends yet to fully manifest. Also, a new case was discovered
in Auckland on 14 February, and as of 28 February 2021, a 7-day lockdown has been imposed on
New Zealand’s largest city, Auckland, with the rest of the country under heightened restrictions
while the outbreak is contained.
New Zealand’s response to the Covid-19 pandemic
New Zealand’s relative good fortune can be attributed to a combination of factors, including the
virus reaching New Zealand later than other countries, and the New Zealand Government’s go hard,
go early strategy.5 “Go hard, go early” is a phrase sometimes used in rugby, New Zealand’s
national sport, and refers to a team making a big effort early in the game to obtain a tactical
advantage over the other side. Applied to the pandemic, it refers to the Government taking hard and
1
Daily updated infection data is available on the Ministry of Health website: < https://www.health.govt.nz/our-
work/diseases-and-conditions/covid-19-novel-coronavirus/covid-19-data-and-statistics/covid-19-current-cases> ;
Overall, mortality was reduced in 2020, thought to be due to the effects of lockdowns on seasonal influenza, road
accidents, occupational deaths, and post-surgical complications, see Stacey King, Marjan Doppen, Melissa Black, Tom
Hills and Nethmi Kearns “Reduced mortality in New Zealandduring the Covid-19 pandemic” (2020) 397(10268) The
Lancet DOI: https://doi.org/10.1016/S0140-6736(20)32647-7
2
Detailed and regularly updated information on the economic effects of the pandemic is available on the New Zealand
Treasury website:< https://www.treasury.govt.nz/information-and-services/nz-economy/covid-19-economic-response>;
Latest information on trade impacts, wellbeing, productivity and greenhouse gas emissions are available on the
Statistics New Zealand Covid Data Portal: < https://www.stats.govt.nz/topics/covid-19>.
3
Monthly labour market reports are available at the Ministry of Business, Innovation and Employment website: <
https://www.mbie.govt.nz/business-and-employment/employment-and-skills/labour-market-reports-data-and-
analysis/monthly-labour-market-fact-sheet/>.
4
For information on the New Zealand public vaccination campaign see the Ministry of Health website: <
https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-novel-coronavirus/covid-19-vaccines/covid-19-
our-vaccine-roll-out-plan>.
5
The first known case of the virus in New Zealand was reported on 28 February, in a person returning from Iran, the
second case identified on 4 March in a person returning from Italy, with a steady increase in cases over the following
days.
1fast action in the earliest stages of the outbreak to eliminate the virus. There have been two main
components to New Zealand’s Covid-19 elimination strategy, border controls and a four-level alert
system imposing varying degrees of restriction on activity and movement. 6 Borders were closed on
18 March 2020 to non-citizens and residents and have not reopened. Anyone entering the country
must stay in a government-run isolation or quarantine facility. 7 A strict national lockdown was
imposed from 24 March to 14 May, with a National State of Emergency declared on 31 March.
Although one of the strictest lockdowns in the world, with immediate and severe economic impact,
it received widespread public support. Early modelling of the disease had predicted New Zealand
would be one of the worst affected countries had such severe action had not been taken. 8 The
national lockdown was effective in eliminating community transmission of the virus, with the
country enjoying 102 days without a new case being detected. 9 The discovery of a new case in
August resulted in a regional lockdown being imposed on the city of Auckland. New Zealand’s
response to outbreaks has been supported by a track and trace system, involving genomic testing,
dedicated contact staff, the Government Covid Tracer App installed on the phones of the majority
of the population, and the mandatory display of QR codes in all premises or unique locations. 10
Although the New Zealand Government’s Covid-19 elimination measures imposed much greater
restrictions on individual freedoms and market activity than in other countries, there has been a high
level of political consensus. Recent surveys of public opinion continue to show a high degree of
trust in the Government and support for the actions taken.
Lockdowns and their impact on workers
There are two alert levels requiring lockdowns. The national lockdown started at level four,
reducing to level three, and regional lockdowns have been at level three. Level four requires people
to stay in their homes and avoid contact with anyone not from their household “bubble”. Non-
essential businesses are required to close their premises but can continue to have people working
from home. The list of essential services is very limited, including hospitals and medical services,
life-line utilities, supermarkets and petrol stations. The national lockdown was strictly enforced.
Under alert level three, people were still required to stay at home but enjoyed greater personal
freedom to move around their local area. Many businesses were permitted to re-open their premises,
but not interact with customers, conforming to strict contact-less trading and social-distancing rules.
Public venues remained closed, and workers able to work from home were required to do so. Online
selling and courier companies were permitted to operate under level three, and over this time New
Zealand saw a significant surge in online sales, with courier companies overwhelmed by the
increased volume of domestic packages, hiring additional staff. This growth in domestic online
business remained even after the level three restrictions were removed, with many businesses now
restructuring their operations towards greater online delivery. It also looks likely that working from
home arrangements will remain for many businesses into the future.
6
The details of each level in the alert system can be found on the Government Covid-19 website: <
https://covid19.govt.nz/alert-system/>.
7
Information on the managed isolation and quarantine facilities can be found on the MIQ website: <
https://www.miq.govt.nz/being-in-managed-isolation/isolation-facilities/facility-locations/>.
8
Modelling reports are available on the New Zealand Ministry of Health website:<
https://www.health.govt.nz/publication/covid-19-modelling-and-other-commissioned-reports>.
9
A detailed timeline of New Zealand’s Covid-19 epidemic is available on the Radio New Zealand website here: <
https://www.rnz.co.nz/news/national/437359/timeline-the-year-of-covid-19-in-new-zealand>.
10
Information on the Covid Tracing App can be found on the Ministry of Health website: <
https://covid19.govt.nz/health-and-wellbeing/protect-yourself-and-others/keep-track-of-where-youve-been/nz-covid-
tracer-app/>.
2Wage subsidies and business loans
During the lockdowns many businesses were forced to close their operations with workers unable to
perform their work from home. On 17 March 2020 a national wage subsidy scheme was established
to prevent mass redundancies occurring. Employers that suffered a loss of expected revenue could
apply for the subsidy on the condition they continued to retain their staff and pay at least 80% of
their wages.11 The subsidy was initially available for 12 weeks and comprised a flat rate payment of
$585.50NZD for employees working over 20 hours per week, and $350NZD for those working less
that 20 hours. By mid-April, over 40% of New Zealand’s workforce was being supported by the
scheme, protecting 1.65 million unique jobs and costing 9.9 billion NZD (more than 10% of total
core Crown revenue for the previous year). 12 The wage subsidy scheme was extended until
September, then also made available to cover the resurgence lockdowns in Auckland. A survey of
wage subsidy recipients (between 15-25 May) showed that 97% were sole traders or small
businesses with less than 20 staff. Only 4% had made staff redundant, with 94% reporting that the
wage subsidy had made a positive impact on their cashflow.13
At the beginning of the national lockdown, the Government also introduced changes to allow
businesses to put debts “into hibernation” until they could start trading again to avoid insolvency. 14
A significant package of tax relief and financial support was also made available, including the
Business Finance Guarantee Scheme, making it easier for businesses to borrow from banks. The
Small Business Cashflow (loan) Scheme was made available from 12 May providing one-off
interest-free loans to small and medium sized businesses (50 employees or less). Each business
received a base $10,000, plus $1,800 for each employee, up to $100,000 NZD. Some industry-
specific measures have also been introduced, such as “income equalisation assistance” for “farmers,
fishers and growers,”15 and 400 million NZD in financial support for the tourism sector.16
Unemployment rates 12 months on
While it is hard to assess the impacts of the measures so early, the unemployment rate is better than
expected. In December 2019, the pre-pandemic unemployment rate was 4.1%, rising to 5.3% by
September 2020, and sitting at 4.9% at February 2021. More tellingly however, the underutilisation
rate increased from 10.1% in December 2019, to 13.2% in September 2020, and currently sits at
11.9%.17 The underutilisation rate provides an important indication of who has been most impacted,
with those in part-time, casual or gig-work some of the hardest hit by job losses and reduced hours.
The labour market data also shows that women made up almost 90% of the workers who lost their
jobs during the lockdown, likely due to a combination of the industries most impacted (e.g. travel,
tourism, retail) and the greater proportion of women in part-time, casual and gig work. As in other
11
Information on the wage subsidy scheme is available on the Work and Income New Zealand website:<
https://www.workandincome.govt.nz/covid-19/wage-subsidy/index.html>.
12
Minister on Finance speaking on Radio New Zealand available here:
https://www.rnz.co.nz/national/programmes/checkpoint/audio/2018743103/covid-19-wage-subsidy-bill-nears-10b-govt-
starts-auditing.
13
Survey results available on the New Zealand Treasury website: < https://treasury.govt.nz/publications/weu/weekly-
economic-update-19-june-2020-html>.
14
Where there was the agreement of 50% of creditors.
15
Information on these programmes can be accessed here: < https://www.ird.govt.nz/covid-19/business-and-
organisations/income-equalisation-assistance-for-farmers-fishers-and-growers>.
16
Information about the tourism recovery package can be found at the Ministry of Business, Innovation and
Employment website: < https://www.mbie.govt.nz/immigration-and-tourism/tourism/tourism-recovery/>.
17
Ministry of Business, Innovation and Employment, above at 3.
3countries, New Zealand has seen significant gender and ethnic inequalities in the economic and
social impacts of the pandemic, with Māori and Pacific women the most impacted. 18
Increased welfare support
Despite the introduction of the wage subsidy and business loans many workers did lose their jobs
during the lockdowns. On 1 April 2020 welfare benefits in New Zealand were increased, the normal
“stand-down” period was removed for people accessing an unemployment benefit, and new
regional job agencies created. 19 A temporary programme for housing the homeless, utilizing empty
hotel rooms, was implemented, with reforms to tenancy laws making rent increases unlawful and
introducing new restrictions on terminating tenancies.20 On 25 May the Government announced a
new temporary Covid Income Relief payment to support people who lost their job during the
pandemic to adjust and find new employment. The tax-free payment of $490NZD per week for
previously full-time workers, and $250NZD per week for previously part-time workers, is paid for
12 weeks to assist in adjusting and finding new employment. There is no mandatory minimum
entitlement to redundancy compensation in New Zealand. While some workers had a contractual
entitlement, many of those who lost their jobs did not, leaving them with only the benefit system to
fall back on. New Zealand’s redundancy laws and welfare system have long needed an overhaul,
with existing weaknesses highlighted under lockdown. The rapid speed of the Government response
to longstanding social justice issues such as benefit inadequacy and homelessness was a stark
reminder that action could have been taken in the past had there been the political will to do so.
Polling in January/February of 2021 showed 69% of people wanted the Government to “increase
income support for those on low wages or not in paid work.”21 Hopefully, the Covid-19 experience
leads to serious reforms in this area.
Job creation projects
To support job growth and economic recovery the Government announced a 50 billion NZD
recovery package, with substantial amounts allocated to job creation projects. On 1 April local
authorities were asked to nominate “shovel ready” local infrastructure projects that could be used to
create jobs, with future “job rich” infrastructure, housing and environmental restoration projects
forming a core component. The recovery package also included a 1.6 billion NZD trades and
apprenticeships package, making all apprenticeships free from July 2020, and paying businesses a
wage subsidy for taking on apprentices. An extra 400 million has been allocated for the
employment support agency, including 19.3 million to place people in primary sector jobs (e.g.
agriculture and horticulture). The Government has also created 11,000 new jobs in environmental
projects, biosecurity, conservation and enhanced biodiversity projects. A specific 22 million NZD
initiative was announced for Auckland Pacific Peoples transitioning to high quality jobs. Existing
18
For analysis of the gendered impact of Covid-19 on New Zealand workers see Annick Masselot and Maria Hayes
“Exposing Gender Inequalities: Impacts of Covid-19 on Aotearoa/New Zealand Employment” (2020) 45(2) New
Zealand Journal of Employment Relations 57-69. DOI: https://doi.org/10.24135/nzjer.v45i2.21.
19
The rates were increased to $40.91 per week for single people and $63.64 per week for couples and those with
children. More information can be accessed here: < https://www.workandincome.govt.nz/products/a-z-benefits/winter-
energy-payment.html>.
20
A new Schedule 5 to the Residential Tenancies Act 1986 was added to do this.
21
Details and media discussion of the UMR poll are available here:
https://www.rnz.co.nz/news/national/436866/survey-finds-69-percent-want-income-support-for-those-in-need-
increased?fbclid=IwAR2o2nB7zhqJ2M_pgf1yi2XA9r39W0TjcFB4Lh_vi1eok86OwSskF5JHboE.
4employment programmes, He Poutama Rangatahi, Mana in Mahi and Māori cadetships (focussed
on employment for young Māori) also received increased funding.22
Migrant workers
It is important to note that not all workers in New Zealand enjoyed the same access to Government
support. Workers on temporary work visas that found themselves effectively stuck in New Zealand
during lockdown were not able to access social welfare benefits with unions and migrant worker
advocates highlighting the hardships and risks of exploitation faced by this group. It was reported
that there were approximately 350,000 temporary visa holders onshore, including 70,000 students
and 56,000 on visitor visas.23 An assistance package for foreign nationals was announced in
response to criticism. The package provided assistance with food and accommodation for those in
serious hardship but did not provide cash payments or access to the wider welfare system, failing to
resolve the underlying problems. Many sectors, such as horticulture, had been heavily reliant on
migrant labour, and by spring harvest season the absence of these workers was a topic of significant
national debate, with employers unable to find New Zealand workers willing to pick fruit and
vegetables under the same conditions. A deal was reached between the Government and the
horticulture industry that allowed for some workers to be given entry visas on a number of
conditions, including they be paid no less than the living wage (a rate of pay higher than the adult
minimum wage).24 Migrant worker exploitation had been an area of concern prior to Covid-19, with
reforms introduced and further improvements being considered pre-Covid. It is unclear what
changes will be introduced, either in response to the impact of the lack of migrant workers, or
following the pandemic. Again, the Covid-19 experience is highlighting the fact New Zealand could
have done more in the past to ensure the fair treatment of migrant workers had there been the
political will.
Border closure and its ongoing impacts
As a result of neoliberal economic reforms in the 1980s and 1990s, the New Zealand economy is
one of the most “internationally facing” economies in the world, heavily dependent on international
trade and tourism. Tourism, for example, previously made up 16.2% of export earnings and
employed 8% of total workforce. 25 Twelve months on, the greatest ongoing economic effects are in
these sectors. New Zealand’s borders remain closed, with the absence of tourists one of the most
noticeable differences in daily life. While there is little concrete research yet, there also seems a
growing focus on local social issues and an emerging sense of disconnection with the rest of the
world. For example, the lack of flights coming into the country coupled with global production and
shipping disruptions overseas mean that non-essential imported consumer goods are either
unavailable or are substantially delayed, and many large international chain stores have ongoing
supply problems. As a result, many New Zealand businesses are looking to local producers and
suppliers, and new local businesses are emerging to fill gaps. It remains to be seen if this trend back
to local production and away from overreliance on global supply chains remains once the pandemic
has ended.
Future reforms to labour and social security law
22
Details of the economic recovery package outlines in the budget can be found on the New Zealand Treasury website
here: https://treasury.govt.nz/information-and-services/new-zealand-economy/covid-19-economic-response/measures.
23
Figures provided in the Government press release that accompanied the passage of the amending legislation, here:<
https://www.beehive.govt.nz/release/pragmatic-changes-immigration-act-respond-covid-19-passed>.
24
Media coverage of the deal is available here:< https://www.rnz.co.nz/news/national/431549/govt-to-allow-2000-
horticulture-workers-in-from-pacific-under-strict-conditions>.
25
New Zealand-Aotearoa Government Tourism Strategy (May 2019), available at:
https://www.mbie.govt.nz/immigration-and-tourism/tourism/new-zealand-aotearoa-government-tourism-strategy/.
5The Covid-19 pandemic has highlighted significant pre-existing weaknesses in the laws protecting
working people, including the lack of clarity in sick and annual leave rules, the lack of redundancy
compensation entitlement, the inadequacy of welfare benefit levels, and the lack of protection for
migrant workers.26 The negative economic impacts of the pandemic are not evenly distributed, with
workers in insecure employment some of the worst affected. The pandemic is exacerbating existing
social and economic inequalities and highlighting the previous lack of political will to tackle social
justice issues. As yet, there have been few meaningful reforms to New Zealand’s labour and social
security laws as a result.
Dawn Duncan
Lecturer, University of Otago
26
Further discussion of the weaknesses in New Zealand’s labour laws highlighted by Covid-19 see Gordon Anderson
“Labour law under stress: Some thoughts on Covid-19 and the future of labour law” (2020) 45(2) NZJER 33-41. <
https://doi.org/10.24135/nzjer.v45i2.23>.
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